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Libra Has Lost A Quarter Of It’s Partners: And That Might Not Matter At All

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Libra – the cryptocurrency project Facebook that aims to compete with PayPal and other payment processors was facing a terrible blow when nearly 1/4 of their partners decided to drop out from the project citing a number of concerns.

But in a recent statement to Yahoo finance, Libra leader David Marcus reaffirmed that the project was “absolutely not” in trouble and that the mounting pressure was simply proof that Facebook was onto something big.

Is Marcus right? Can Libra still survive with the loss of a quarter of its partners?

Libra

Singing the Libra Blues

From its earliest days as “Globalcoin“, the Facebook cryptocurrency has faced a multitude of doubters and naysayers, including many in the crypto media.

For those unfamiliar, Libra aims to be a stablecoin (or more precisely a “basket coin”) pegged to the US dollar and supported by fiat currency reserves. Those reserves will earn interest on the deposits and users can send and receive Libra with no cost, making it a potentially powerful competitor to other payment platforms.

On the crypto side of things, commentators have been quick to point out that Libra will end up being a highly centralized currency that doesn’t properly utilize blockchain technology in its intended way. Namely, it won’t be used as a way to sidestep big corporations and banks that stand between senders and recievers. Those from the traditional financial side of the debate have been arguing that Libra will inevitably run afoul of regulators and consider that lawsuits and SEC meddling are inevitable.

Do Partners Matter for Libra Success?

Some of the partners stepping away from Libra include the likes of Visa, MasterCard, and Stripe – big payment processors that rely on traditional financial rules and means of doing business. These types of companies tend to be overwhelmingly conservative and objectively terrified of anything risky or new. What’s surprising is not that they dropped out of the project, but that they ever expressed an interest in it in the first place.

As the goal behind the Libra project is to offer an alternative to traditional payment networks, it does seem on the surface that the loss of these partners is not relevant. Visa makes billions by charging high transaction fees, as does MasterCard and Stripe. If the Libra dream were to come true, these kinds of transaction fees could become a thing of the past – and that is something those companies shareholders are not likely to look forward to.

Second, we need to ask ourselves, are partners of any kind important for Libra? Surprising as it may seem, the answer very well might be no. Let’s consider Uber, one of the partners that is still working with Libra. Uber did not become a household name by buddying up with the taxi companies they wanted to replace. Instead, Uber was able to establish dominance by innovating and offering what is arguably a better product.

In the cryptocurrency world, partnerships are often not a necessity. Just look at the early breakout hits like bitcoin, Litecoin, Ethereum, and the list goes on and on. These projects launched in effectively total solitude and manage to establish a degree of market dominance without needing any help from those they were trying to replace such as the banks.

In short, Libra may be able to do just fine without any help (or interference) from the traditional banking sector. If anything, this could turn out to be a major victory.

A great example of what may be happening is what happened to the Kodak company. Kodak had developed the digital camera decades before they became popular, and yet they chose to hold back the invention for fear that it would damage their profits from film sales and film processing equipment. Clearly that was a mistake. It makes us wonder if Visa, MasterCard and Stripe are engaging in a similar mistake.

We Will Make the Choice, Not the Banks

In the end, all of this posturing and shuffling won’t make any difference. Facebook is a big and powerful company that has the resources needed to pull this off no matter how much regulators or banks try to get in their way. As long as Facebook wants this to happen, it will happen. Even if it takes longer than they initially thought.

It won’t be Facebook or Visa or Stripe that decides whether or not Libra is a success. Instead, it will be up to us. If we are offered something that is compelling and competitive, then it will eventually find its place in the market. Whether that be a dominant position or simply filling a niche, it will find a place to land as long as it gives us something that we want. On the flipside, if Libra ends up being a crippled and expensive shadow of its former proposed glory, then it will fade into obscurity as we the consumers choose to rightfully ignore it.

But in either case it again will not be up to old world payment processors to decide. On the contrary, it will be entirely up to us.

The post Libra Has Lost A Quarter Of It’s Partners: And That Might Not Matter At All appeared first on Blockonomi.



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